New Spin Or Death Spiral?
By Al Diamon
Created Aug 2 2007 - 5:30pm
August 2, 2007
My principal source for this story is anonymous. There's a good reason for that. This person doesn't want to be fired for saying something that contradicts the official company line, which is that everything is swell in the Maine daily newspaper industry.
My source is not a disgruntled underling. He, she or it is a person in authority, widely respected and usually courageous enough to say whatever she, it or he thinks without resorting to off-the-record comments.
But when you're discussing the impending destruction of the profession to which you've devoted your entire adult life, discretion is probably the better part of you know what.
"I hate the idea of spending my final years in this business presiding over its demise," my source said in an e-mail. "But beyond that, I think the decline of community newspapers will have a serious impact on the kind of information that [readers] are looking for in newspapers … [A]s revenue declines, and staffing is cut, less and less basic reporting will be done."
This isn't some vague prediction. My journalistic Deep Throat said the threat is specific and impending: "I would be very surprised if you don't see some staff cuts at the larger papers [in Maine] this year or early next."
The author of this gloom-and-doom assessment is, in my humble opinion, highly credible. I'll leave determinations as to the credibility of the other industry officials quoted below to the discretion of astute readers.
To aid you in making that judgment, let's look at some facts.
Circulation figures for daily papers show that in the last 4 years, all the dailies in the state have taken major hits. In 2002, the Portland Press Herald sold an average of more than 76,000 papers, Monday through Saturday, and the Maine Sunday Telegram unloaded over 123,000 each week. In 2006, those numbers had dropped to about 68,000 daily and 103,000 on weekends, an 11 percent falloff during the week and a 17 percent decline on Sunday. In 2002, the Bangor Daily News' circulation was nearly 65,000 on weekdays and over 76,000 on Saturday. By 2006, the News was struggling to stay above 60,000 daily and was just north of 70,000 on weekends. That's a loss of about 7 percent for each. The state's smaller papers experienced only slightly less drastic declines.
According to officials at several papers, those steep drops have eased in 2007. But the New England Newspaper Association (NENA) reports that circulation across the region is down an average of 2 to 3 percent in the last year, which seems to indicate that many papers are still bleeding readers. And for those that aren't, mostly the smaller ones, it's still unclear whether holding steady is a sign of an impending turnaround or just a bottoming out.
But even if the worst of the readership losses is over, that doesn't address the real problem. Ad revenues are down. Way down.
"More and more advertising is controlled by national retailers who do not advertise much anywhere (Wal-Mart), do not see newspapers as part of their advertising mix or just run inserts," writes the mysterious source. "Display advertising is down 10-20 percent year-to-year at every daily newspaper in Maine."
That may be a slight exaggeration. Or not. According to figures collected by NENA, display ad lineage for Maine papers through May of this year is off by an average of almost 6.5 percent compared to 2006. Only two papers were down by as much as 10 percent, but every paper in Maine lost ground, with the hardest hit being the larger papers. The Press Herald, in particular, suffered from the closing of the Filene's department store in South Portland, a major advertiser.
My anonymous insider might still be correct about the 10- to 20-percent decline, because NENA's figures were submitted by the newspapers themselves and weren't audited for accuracy. Also, ad revenues may have declined even more than the lineage figure, because some papers are offering major discounts to make up for their reduced circulation.
An even bigger problem: A significant portion of classified advertising, once a cash cow for newspapers, has shifted to the Web, particularly help-wanted ads. At the same time, the economic downturn in the American auto industry has caused car dealers to cut their ad budgets, much of which went into classifieds.
Newspapers have responded by creating their own Web classified pages, but in order to compete with Internet rivals, they've been forced to charge far less for those ads than they once got for the print versions - or even offer them for free.
"Readership on [newspaper] Web sites is through the roof," said Phil Lucey, advertising manager for NENA. "But there's certainly not the same revenue opportunity on the Web as there is in print."
Maine's dailies are mostly owned by private companies that don't release detailed financial figures, so it's difficult to tell exactly how severe the shortfall is. But if Maine is any reflection of the national scene, it's pretty bad. According to the Associated Press, revenues were down 3.7 percent at the New York Times Co. in the second quarter of this year and off 7 percent at the Tribune Co. Classified sales were off over 13 percent at the Times and nearly 18 percent at the Tribune.
Steve Costello, the vice president of advertising and marketing at the Sun Journal in Lewiston, said there's no comparison between losses at major dailies and those at his paper. As for claims that local newspapers had entered a death spiral, he said, "That's very exaggerated … We've been through these downturns in the cycle on numerous occasions."
The Sun Journal laid off several employees earlier this year, but Costello denied his company planned additional layoffs in the near future. He declined to say how much advertising revenue had fallen at his paper, but did say income from the Sun Journal's Web site had shown an increase. "We're trying to find the right mix of Internet and printed material for advertisers," he said. "We're constantly trying to tweak things."
At the Bangor Daily News, Robert Stairs, the vice president and treasurer, rejected claims that ad revenue had declined significantly. "We're off a little bit," Stairs said, but he expected new businesses scheduled to open in the next year, niche publications, special sections and other printing projects to reverse that trend and make more layoffs - the paper got rid of several veteran workers a few months ago - unnecessary. What he's not counting on to improve the bottom line is the Web.
"We were a little slower getting into that," Stairs said. "Our Web site will make some money, but I don't know if will make lots of money. Time will tell."
Douglas Niven, publisher of the Times Record in Brunswick, said ad lineage at his paper has declined about 2.4 percent this year, but some of that loss was offset by lower costs for newsprint, efficiencies from a new facility and the generally healthy economy in the midcoast area. To some extent, Niven said, local advertisers have filled the gap caused by national companies cutting back.
"We didn't have a lot of national ads to begin with," he said. "So, we're not feeling the effects like the Press Herald and Boston Globe are."
At the Press Herald, Kennebec Journal and Morning Sentinel, newspapers owned by the Blethen family, the official position is one of optimism. In a column published late last year, Press Herald editor Jeannine Guttman wrote, "Our readership is increasing despite some softening in print circulation, because our Web site numbers are growing." Eric Conrad, the executive editor of the Sentinel and KJ, expressed similar sentiments in a column in July. "Paid circulation [of the two newspapers] and readership of our Web sites - taken together - are higher this year than they were last year," Conrad wrote. "More people in central Maine are reading our local journalism than before."
Layoffs? In a phone interview, Conrad said there are no plans for any, and vacant positions in the newsroom are currently being filled. Conrad said his papers' circulation has dropped only slightly this year, while the growth in Web readership had been "dramatic." The Blethen papers recently realigned their news operations to put more emphasis on their Web sites.
Which brings up another problem. Publishers who assume Web visitors will make up for the decline in newspaper purchasers could be making a serious mistake, because Web readers and print readers may be the same people. According to a survey done at one Maine paper, a majority of visitors to the publication's Web site were not the 18- to 35-year olds who have given up or never developed the habit of reading newspapers. They were older readers of the print edition looking for updated information. It's possible that for all those hits, the Web isn't attracting many new customers.
It's not clear whether that survey, the contents of which were discussed with me on condition that I not reveal the paper's name, represents a trend or an aberration. To Conrad, it doesn't much matter in charting a course for his newspapers' survival. He just plans to keep it local.
"As a rule," he said, "the smaller the daily newspaper and the closer to the community, the better off you are financially.
"Where you don't want to be is the Boston Globe."
By this time next year, we should know who's correct, Conrad and his fellow optimists or my anonymous source. If it's the latter, don't expect to read about it in your local newspaper.
Al Diamon can be e-mailed at email@example.com.